Senate Finance Committee Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs Our nation's health care providers - physicians, nurses, hospitals, and others - work hard to provide life-saving and life-improving care to millions of Americans. However, the level of quality and efficiency of care provided varies significantly across the country. It has become increasingly evident that the way health care is paid for in our system does not always encourage the right care, at the right time, for each and every patient. Today's payment systems more often reward providers for the quantity of care delivered, rather than the quality of care and discourage providers from working together to offer patients the best possible care.

A reformed health care delivery system will re-orient payment incentives toward services and activities that improve patient care in an effective and efficient manner and bend the curve of growth in national health care spending.

In 2008, the United States spends more than 17 percent of our gross domestic product (GDP) on health care - more than any other industrialized country in terms of total and per capita spending. By 2017, health expenditures are expected to consume almost 20 percent of GDP, or $4.3 trillion annually. While spending is high, our nation ranks low in many areas of quality. Various reports have concluded that our current health care system is not making progress toward improving quality or containing costs for patients or providers. This combination of high spending and lagging quality is unsustainable for patients, business and state and federal governments.

In addition to inefficiency, the current health system suffers from significant levels of fraud, waste, and abuse. Scarce health care dollars should be spent as effectively as possible. However, the improper payment rate for Medicare in 2008 was 3.6 percent or $10.4 billion. While it is difficult to know the exact amount of money lost through fraud and abuse, the National Health Care Anti-Fraud Association estimates that fraud is equal to at least three percent of total health care spending, or more than $60 billion per year. Protecting the integrity of federal health care programs and minimizing fraud, waste, and abuse are important components of reforming the health care system.

The dynamics in our health system affect the care that is delivered in both the public and private sectors. In many cases, changes to federal health programs like Medicare activate and pave the way for system-wide changes. The proposals contained in this document set forth ideas on ways to revise payment systems and policies in the Medicare program to promote higher-quality, and more cost-effective care and to reduce fraud, waste and abuse throughout the health system.

Proposals in this document are organized into the following categories:

Section I Payment Reform - Improving Quality and Promoting Primary Care
Section II Payment Reform - Fostering Care Coordination and Provider Collaboration
Section III Health Care Infrastructure Investments - Tools to Support Delivery System Reform
Section IV Medicare Advantage - Promoting Quality, Efficiency and Chronic Care Management
Section V Public Program Integrity - Combating Fraud, Waste and Abuse

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